Lululemon (LULU) Falls More Steeply Than Broader Market: What Investors Need to Know

Lululemon (LULU) closed at $169.53 in the latest trading session, marking a -3.6% move from the prior day. This move lagged the S&P 500's daily loss of 1.57%. At the same time, the Dow lost 1.34%, and the tech-heavy Nasdaq lost 2.04%.

Heading into today, shares of the athletic apparel maker had lost 13.43% over the past month, lagging the Consumer Discretionary sector's loss of 3.21% and the S&P 500's loss of 0.29%.

The upcoming earnings release of Lululemon will be of great interest to investors. In that report, analysts expect Lululemon to post earnings of $4.74 per share. This would mark a year-over-year decline of 22.8%. At the same time, our most recent consensus estimate is projecting a revenue of $3.6 billion, reflecting a 0.24% fall from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates project earnings of $13.06 per share and a revenue of $11.08 billion, demonstrating changes of -10.79% and +4.61%, respectively, from the preceding year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Lululemon. These revisions help to show the ever-changing nature of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.37% lower. Lululemon currently has a Zacks Rank of #3 (Hold).

In the context of valuation, Lululemon is at present trading with a Forward P/E ratio of 13.78. This expresses a discount compared to the average Forward P/E of 18.87 of its industry.

It is also worth noting that LULU currently has a PEG ratio of 11.11. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Textile - Apparel was holding an average PEG ratio of 2.28 at yesterday's closing price.

The Textile - Apparel industry is part of the Consumer Discretionary sector. Currently, this industry holds a Zacks Industry Rank of 72, positioning it in the top 30% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.